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PG&E CORP FILES (8-K) Disclosing Other Events

Source: 
Edgar Glimpses

Item 8.01 Other Events.

On June 27, 2019, the California Public Utilities Commission (the "CPUC") issued an Order Instituting Investigation (the "2017 Northern California Wildfires OII" or the "OII") to determine whether Pacific Gas and Electric Company (the "Utility"), a subsidiary of PG&E Corporation, "violated any provision(s) of the California Public Utilities Code (PU Code), Commission General Orders (GO) or decisions, or other applicable rules or requirements pertaining to the maintenance and operation of its electric facilities that were involved in igniting fires in its service territory in 2017."

The 2017 Northern California Wildfires OII discloses the findings of a June 13, 2019 report by the CPUC's Safety and Enforcement Division ("SED"), which, among other things, alleges that the Utility committed 27 violations in connection with 12 investigations of the 2017 Northern California wildfires (specifically, the Adobe, Atlas, Cascade, Norrbom, Nuns, Oakmont/Pythian, Partrick, Pocket, Point, Potter/Redwood, Sulphur and Youngs fires). As described in the OII, the 27 alleged violations include failure to maintain vegetation clearances, failure to identify and abate hazardous trees, improper record keeping, incomplete patrol prior to re-energizing a circuit, failure to retain evidence and failure to report an incident. No violations were identified by SED in connection with the Cherokee, La Porte and Tubbs fires. The 37 fire was determined by SED to not be a reportable incident. The SED report also alleges that the Youngs fire (which the Utility has previously referred to as the Maacama fire) and the Point fire, whose determinations of cause have not been publicly made by the California Department of Forestry and Fire Protection ("Cal Fire"), were caused by vegetation coming into contact with overhead conductors owned by the Utility. The SED report does not address the Lobo and McCourtney fires because Cal Fire referred its investigations into these fires to local law enforcement and the information contained in its investigation reports related to these fires remains confidential.

The OII also indicates that "[i]n the course of its investigations, SED identified various matters of concern that […] warrant further investigation and possible charges for violations of law." These matters include the following: (i) the Utility's vegetation management procedures and practices, (ii) the Utility's procedures and practices regarding use of "recloser" devices in fire risk areas and during fire season, (iii) the Utility's lack of procedures or policies for proactive de-energization of power lines during times of extreme fire danger, and (iv) the Utility's record-keeping and other practices.

The 2017 Northern California Wildfires OII requires the Utility to (i) show cause by July 29, 2019 why it should not be sanctioned for the 27 violations alleged in the SED report and (ii) submit a report by August 5, 2019, responding to information requests relating to the Utility's policies and practices and other wildfire-related matters. The Utility is also required to take certain corrective actions within 30 days of the issuance of the 2017 Northern California Wildfires OII, including filing an application to develop an open source, publicly available asset management system/database and mobile app, the costs of which will be at shareholder expense.

The OII also indicates that the assigned commissioner shall set a prehearing conference for 45 to 60 days after the initiation of the proceeding or as soon as practicable after the CPUC makes the assignment. The assigned commissioner will also issue a scoping memo setting forth the scope of the proceeding and establishing a procedural schedule.

PG&E Corporation and the Utility are unable to predict the outcome of the CPUC's investigation. PG&E Corporation's and the Utility's financial condition, results of operations, liquidity and cash flows could be materially affected if the Utility were required to pay a material amount of penalties or if the Utility were required to incur a material amount of costs that it cannot recover through rates.

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